Global Trade Agreement to Simplify E-commerce for International Business Shows Signs of Progress

Global Trade Agreement to Simplify E-commerce for International Business Shows Signs of ProgressARTICLE

By Bill Camarda

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E-commerce offers major opportunities to grow international business, especially for smaller companies that face greater relative challenges when it comes to serving foreign markets. Until now, however, cross-border e-commerce has been hobbled by complex 20th century trade rules – or, in many cases, the complete absence of rules that buyers and sellers can rely upon. But, this may soon change: the World Trade Organization (WTO) has prioritized and accelerated work to reduce the friction involved in global trade via e-commerce.

As one commentator has noted, "global rules for e-commerce are [still] almost non-existent, except for a temporary moratorium on imposing customs duties on electronic transmissions."1 Where rules do exist, the International Chamber of Commerce (ICC) says, they don’t reflect "Internet-led changes to the composition, nature and speed of global trade."2 This means, for example, that it is often costly and difficult for many businesses to clear small e-commerce shipments through customs, and buyers can’t rely on international standards for customer service and dispute resolution.

A Powerful Opportunity to Supercharge Global Trade

The payoff from a successful global trade agreement could be sizable. As ICC notes, Micro, Small and Medium-sized Enterprises (MSMEs) "that use online platforms are around five times more likely to export" than companies that don’t. So too, international businesses "connected to the global economy are more productive and [help develop] more prosperous communities."3

If WTO can develop consistent multilateral rules, says WTO Director-General General Roberto Azevêdo, international MSMEs could operate faster, become more price-competitive, and provide more reliable customer support – and consumers would be far more confident about purchasing from them.4 Finally, as WTO e-commerce trade negotiator Lee Tuthill said in a presentation at a July 2016 WTO forum on e-commerce, expanded global e-commerce could “help reduce the extent of restrictive business practices… by facilitating market entry for smaller service suppliers” – potentially promoting the “inclusive trade” that WTO has prioritized.5

Progress in International Trade Accelerates Since July

WTO has discussed e-commerce since 1998, but the second half of 2016 saw unprecedented activity. Under WTO’s auspices, Australia, Mexico, Indonesia, South Korea, and Turkey organized a July workshop on overcoming obstacles to global e-commerce.7 Separately, Canada, China, the EU, Japan, South Korea, Switzerland and the U.S. "voiced support for stepping up work." Diplo Foundation and the American University Program on Information Justice and Intellectual Property explored informal presentations by the EU, U.S. and Brazil, finding “an overlapping consensus” for discussing several key intellectual property and privacy issues.8

Early in August, Azevêdo visited Facebook's California headquarters for a roundtable on global e-commerce with top Silicon Valley leaders and startups.9 In late September, a major WTO forum on inclusive digital trade hosted nearly two dozen sessions. By November, The Hindu Business Line reported, China and Pakistan had "submitted a detailed proposal on [negotiations]… and more than 20 members [offered input on] scope and scale." Then, in December, Azevêdo participated in an “E-commerce for Development” seminar bringing together stakeholders from Argentina, Costa Rica, Kenya, Nigeria, Pakistan, Sri Lanka and Uruguay.10

Much Work Remains

With all these recommendations in hand, negotiators hope to make significant progress before WTO's next ministerial-level conference in December 2017. Still, much needs to be resolved.

For example, some WTO representatives from developing economies worry that an agreement might not fully consider their technical and financial disadvantages. According to a summary by the Geneva Internet Platform, these countries reported “poor infrastructure and logistics, lack of or unreliable online payment mechanisms, cumbersome customs procedures, issues related to trade licensing and other regulatory aspects, and lack of digital skills.”11

According to The Hindu Business Line, China has suggested focusing on three areas where agreement might be easiest to reach: "trade facilitation for cross-border e-commerce, transparency on e-commerce policies, and assistance to improve infrastructure and technical conditions for developing country members."12 But India has opposed "cherry-picking" individual issues.13 According to the WTO, some members also “emphasized the importance of maintaining discussions on… online trade in services as well as commitments for consumer protection, data privacy, and intellectual property rights.”14

As WTO Director-General Azevêdo recently acknowledged, “Clearly there are different views among members on how to [proceed]. And there are some concerns that the digital divide and the knowledge gap would limit an inclusive conversation on e-commerce issues.”15 But, as he said in October, while “we are still at the early stages of these discussions… engagement is high – and so is ambition.”16

The Takeaway

WTO members are accelerating work towards an agreement on simplifying e-commerce for doing international business. If successful, such an agreement could help far more MSMEs enter worldwide markets and significantly increase global trade.

The Author

Bill Camarda

Bill Camarda is a professional writer with more than 30 years’ experience focusing on business and technology. He is author or co-author of 19 books on information technology and has written for clients including American Express Private Bank, Ernst & Young, Financial Times Knowledge and IBM.

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